On The Call: Intel CEO Paul Otellini on timing of rebound in business spending on technology

On The Call: Intel CEO on business spending

SAN FRANCISCO — Weak spending by corporations on new personal computers was one of the few problem areas in an otherwise standout third quarter from chipmaker Intel Corp. The trend has dragged on through the recession and probably won’t ease until next year.

Intel easily surpassed Wall Street’s forecasts in the July-September period, despite profit and sales falling 8 percent, and offered better-than-expected guidance of $9.7 billion to $10.5 billion in sales for the fourth quarter. Shares rose more than 4 percent in extended trading.

Still, a question on analysts’ minds on a conference call with management concerned Intel’s predictions for a rebound in corporate spending on technology. Intel’s CEO, Paul Otellini, said the company is seeing momentum in the corporate spending on servers, but other areas were more challenging.

QUESTION: What do you see happening with corporate spending in 2010? Is it possible PCs might remain weak while sales of server chips recover?

ANSWER (Paul Otellini, Intel CEO): We are seeing pretty good strength in the enterprise relative to the server part of the business. It’s the client part, the desktop and notebook part, where the lights have been out for a quite a while and now we’re starting to see people do evaluations of our new platforms with Windows 7. I can’t give you a curve for that for 2010. It really gets down to when CEOs and CFOs set the budgets in the next couple of months for 2010 in terms of (capital expenditures) and whether they want to open the checkbooks again. The compelling value for a refresh is there. Machines that are four and five years old, which is the average fleet age right now, are costing more to keep than to buy a new machine.”